Bull vs Bear: Hoping for a Better Deal…
The market’s back and forth movement continues.
Last week, after the US Fed minutes were released buyers slowly dipped their collective toes into the market as haze helped gold to a new 6-year low on the back of the terrorist events in Paris.
Is the market in general beginning to not only expect - but importantly, accept - the upcoming shift in interest rates?
That would be a good thing.
We’ve stated for many months now that the US Fed needs to raise rates and move forward, and said that the current policy has long since worn out its welcome - keeping rates low only keeps the fear simmering close to the surface.
And if we wake up 18 months from now and rates are 150 basis points higher, the economy will very likely be doing quite well.
Remember, the bond market itself has done most of the heavy lifting in the rate world.
As "fear-driven money flows" are soaked up by low yielding bond issuance the emotional charges will ebb.
I repeat--there will be a day when we will thank our lucky stars for so much fear during the repair and recovery from 2008-2009.
The Only Bad News?
Well sadly, if the market slowly begins to accept the rate hike cycle kick-off with less of an emotional roller-coaster response, this could indeed lessen the odds for another spike downward in market values.
Keep in mind - a spike down would be something to take extreme advantage of should it unfold during the holiday haze.
This roller coaster cycle is one of the reasons I’ve repeated the message that “a new secular bull market is much more difficult to invest in than a bear market”, because the hope is always for a "better deal".